Founded in 2001, Canadian Solar Inc. (CSIQ) is a leading manufacturer of solar photovoltaic modules and provider of solar energy solutions. The company operates primarily through two segments — Module and system solutions (MSS) and Energy. CSIQ has delivered roughly 52 GW of solar modules to thousands of customers in more than 150 countries through the end of 2020. This is sufficient to meet the clean, green energy needs of roughly 13 million households.
CSIQ gained 135.2% over the past six months based on its ability to overcome market challenges and to focus on executing its strategies. It closed yesterday’s trading session at $55.62, 6% below its all-time high of $59.19, which it hit on January 7, 2020. The stock is currently trading at a trailing-12-month P/S of 0.97x, which is much lower than the industry average of 4.19x.
The company reported impressive results for the third quarter ended September 30, 2020, with its solar module shipments exceeding guidance. Also, CSIQ took a major step forward during the third quarter with a successful pre-IPO equity raising by CSI Solar Co., Ltd., its MSS subsidiary. CSIQ’s geographical diversification, financial strength and price momentum have helped the stock earn a “Strong Buy” rating in our proprietary rating system.
Here is how our proprietary POWR Ratings system evaluates CSIQ:
Trade Grade: A
CSIQ is currently trading above its 50-day and 200-day moving averages of $46.80 and $34.82, respectively, indicating an uptrend. Moreover, CSIQ has gained 43.5% over the past month, reflecting solid short-term bullishness.
The company’s top line has climbed 20.3% year-over-year to $914.4 million for the third quarter ended September 30, 2020, driven by higher module shipments and project sales. Total module shipments have increased 33% year-over-year to 3,169 MW. Its gross profit increased 21.2% sequentially to $178.4 million, yielding gross margin of 19.5%. And its EPS of $0.15 surpassed the consensus estimate by 400%.
On January 7, the company announced that its wholly owned subsidiary, Recurrent Energy, had completed the sale of the 144 MWac Pflugerville Solar project to Duke Energy Renewables, a subsidiary of Duke Energy Corporation (DUK). On December 22, CSIQ announced the sale of its remaining 30% ownership of the Big Fish SPV S.r.l. and Iron SPV S.r.l. solar projects to Falck Renewables. Buy & Hold Grade: A
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade considers, , CSIQ is well positioned. The stock is currently trading just 6% below its 52-week high of $59.19, which it hit on January 7.
The company’s net revenue has grown at a CAGR of 4.4% over the past three years, while its EBITDA increased at a CAGR of 40.5% over the same period. Also, its EPS has increased at a CAGR of 112.5% over the past three years.
CSIQ had generated 30% growth in shipments since 2013 and has generated nearly $1.4 billion in cash since 2013.
Peer Grade: B
SOL and RUN beat CSIQ gaining 1507.9%, and 494.7%, respectively, over the past year, while FSLR returned 81.4% over the same period.
Industry Rank: B
The Solar industry is ranked #31 out of 123 StockNews.com industries. With a gradual decline in the cost of storage, solar energy is expected to lead the change to a renewable energy-driven future.
This industry faced several problems amid the pandemic, including a temporary halt in production by some units , but demand for its products has since been gaining pace. As solar energy becomes much more mainstream and easier to use with technological advancements, this industry is expected to thrive in the near term.
Overall POWR Rating: A (Strong Buy)
CSIQ is rated “Strong Buy” due to its short- and long-term bullishness, solid growth prospects, and underlying industry strength, as determined by the four components of our overall POWR Rating.
CSIQ has the potential to advance in the upcoming months despite gaining more than 136% over the past year, based on its continued business growth, favorable earnings and revenue outlook, and favorable analyst sentiment.
Analyst sentiment, which gives a good sense of a stock’s future price movement, is good for CSIQ. It has an average broker rating of 1.64, indicating favorable analyst sentiment. Moreover, CSIQ has an impressive earnings surprise history with the company beating consensus EPS estimates in each of the trailing four quarters.
The consensus revenue estimate of $4.93 billion for 2021 represents indicates 43.6% increase year-over-year. Its EPS is expected to grow 20.4% in 2021, and at a rate of 20% per annum over the next five years.
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CSIQ shares were trading at $53.77 per share on Friday morning, down $1.85 (-3.33%). Year-to-date, CSIQ has gained 4.94%, versus a 0.41% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...
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